Balance Sheet Components

9 Months Ended

Jul. 02, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

5. Balance Sheet Components

Accounts receivable, net of allowances

Accounts receivable, net of allowances, consist of the following:


	July 2, 2022			October 2, 2021
(In thousands)
Accounts receivable	$	148,112		$	121,486
Allowance for credit losses		(2,357	)		(1,547	)
Allowance for sales incentives		(20,871	)		(19,160	)
Accounts receivable, net of allowances	$	124,884		$	100,779

Inventories

Inventories, net, consist of the following:


	July 2, 2022		October 2, 2021
(In thousands)
Finished goods	$	258,994	$	154,608
Component parts		76,736		30,522
Inventories	$	335,730	$	185,130

The Company writes down inventory as a result of excess and obsolete inventories, or when it believes that the net realizable value of inventories is less than the carrying value.

Goodwill

The following table presents the changes in carrying amount of goodwill during the nine months ended July 2, 2022:


(In thousands)
Balance as of October 2, 2021	$	15,545
Goodwill acquired		66,078
Effect of exchange rate changes on goodwill		(1,799	)
Balance as of July 2, 2022	$	79,824

Intangible assets

As part of the acquisition of Mayht Holding BV ("Mayht"), the Company recognized $71.8 million in intangible assets related to in-process research and development activity, which is not subject to amortization for the current period. In addition, the Company recognized $0.5 million in intangible assets subject to amortization, with a weighted-average useful life of approximately 6 years.

In the third quarter of fiscal year 2022, the Company determined that the underlying project related to the in-process research and development from the acquisition of Snips was completed. As a result, the acquired $20.1 million of in-process research and development was reclassified as definite-lived developed technology and will amortize over its estimated economic life of 7 years.

The following table reflects the changes in the net carrying amount of the components of intangible assets associated with the Company's acquisition activity:


	July 2, 2022
	Gross Carrying Amount		Accumulated Amortization			Impact of FX			Net Carrying Value		Weighted-Average Remaining Life
(In thousands, except weighted-average remaining life)
Tradename	$	451	$	(19	)	$	—		$	432		5.75
Technology-based		34,563		(6,876	)		—			27,687		5.65
Total finite-lived intangible assets		35,014		(6,895	)		—			28,119		5.65
In-process research and development not subject to amortization		71,759		—			(2,942	)		68,817
Total intangible assets	$	106,773	$	(6,895	)	$	(2,942	)	$	96,936

The following table summarizes the estimated future amortization expense of the Company's intangible assets as of July 2, 2022:


Fiscal years ending	Future Amortization Expense
(In thousands)
Remainder of fiscal 2022	$	1,758
2023		6,180
2024		5,968
2025		3,367
2026		3,038
2027 and there after		7,808
Total future amortization expense	$	28,119

Cloud Computing Arrangements

The Company incurs costs to implement cloud computing arrangements that are hosted by a third-party vendor. Capitalized implementation costs are expensed on a straight-line basis over the reasonably certain term of the hosting arrangement, beginning when the software is ready for its intended use, and are recognized as an operating expense within the condensed consolidated statements of operations and comprehensive income (loss). In May 2022, the Company went live with its implementation of a new enterprise resource planning ("ERP") system. Capitalized implementation costs were $22.7 million and $14.3 million, as of July 2, 2022 and October 2, 2021, respectively, and are reported as a component of other noncurrent assets on the Company's condensed consolidated balance sheets. Amortization expenses for implementation costs for cloud-based computing arrangements in the three and nine months ended July 2, 2022 were not material.

Accrued expenses

Accrued expenses consisted of the following:


	July 2, 2022		October 2, 2021
(In thousands)
Accrued advertising and marketing	$	14,050	$	19,989
Accrued taxes		12,880		16,941
Accrued inventory		33,414		37,117
Accrued manufacturing, logistics and product development		20,131		14,943
Accrued general and administrative expenses		21,117		13,066
Other accrued payables		6,401		5,973
Total accrued expenses	$	107,993	$	108,029

Deferred revenue

Amounts invoiced in advance of revenue recognition are recorded as deferred revenue on the condensed consolidated balance sheets. Deferred revenue primarily related to revenue allocated to unspecified software upgrades and cloud-based services. Recognition of revenue includes $18.8 million of deferred revenue from the fourth quarter of fiscal 2021 related to newly launched products sold to resellers not recognized as revenue until the date of general availability was reached, which was in the first quarter of fiscal 2022.

The following table presents the changes in the Company’s deferred revenue for the nine months ended July 2, 2022, and July 3, 2021:


	July 2, 2022			July 3, 2021
(In thousands)
Deferred revenue, beginning of period	$	89,498		$	62,388
Recognition of revenue included in beginning of period deferred revenue		(35,226	)		(13,381	)
Revenue deferred, net of revenue recognized on contracts in the respective period		21,549			21,379
Deferred revenue, end of period	$	75,821		$	70,386

The Company expects the following recognition of deferred revenue as of July 2, 2022:


	For the fiscal years ending
	2022		2023		2024		2025		2026 and Beyond		Total
(In thousands)
Deferred revenue expected to be recognized	$	5,184	$	17,302	$	15,251	$	12,968	$	25,116	$	75,821

Other current liabilities

Other current liabilities consist of the following:


	July 2, 2022		October 2, 2021
(In thousands)
Reserve for returns	$	19,634	$	19,266
Short-term operating lease liabilities		10,254		10,724
Warranty liability		7,428		5,604
Other		6,295		3,950
Total other current liabilities	$	43,611	$	39,544

The following table presents the changes in the Company’s warranty liability for the nine months ended July 2, 2022, and July 3, 2021:


	July 2, 2022			July 3, 2021
(In thousands)
Warranty liability, beginning of period	$	5,604		$	3,628
Provision for warranties issued during the period		9,191			12,218
Settlements of warranty claims during the period		(7,367	)		(10,613	)
Warranty liability, end of period	$	7,428		$	5,233